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Vernalis has pharma loan cancelled

UK based biotech company, Vernalis, has announced that 120 employees will lose their jobs as the company settles its loan with Endo Pharmaceuticals amid major restructuring and cost-cutting plans.

UK based biotech company, Vernalis, has announced that 120 employees will lose their jobs as the company settles its loan with Endo Pharmaceuticals amid major restructuring and cost-cutting plans.

The number of Vernalis employees will be reduced from 210 to 90 in the UK, and 75 people will remain in the R&D side of the company.

Vernalis has cancelled its loan with Endo with immediate effect and will pay back the remaining £3.6m, a move triggered by the Food and Drug Administration's (FDA) rejection of its new drug application (NDA) for Frova.

Frova, developed for treatment of menstrual migraine, will no longer be co-promoted in the US by Endo, and Vernalis will forego royalties for the drug until net sales in America breach the $85m mark.

Peter Fellner, executive chairman at Vernalis, said: "I believe that the settlement of the outstanding loan, together with the extensive restructuring of the business, will create a platform that will enable us to rebuild significant shareholder value in the mid-term."

Vernalis, which expects all restructuring plans to be completed during the second quarter of 2008, says it wants to concentrate on "its innovative discovery programmes, and eventually partner them with its development schemes."

However, the firm has been dealt a further blow with the announcement on February 20 that Simon Sturge, chief executive officer and director of the company, will step down from the role.

Fellner said: "The board and I wish him [Sturge] every success in his future career. I look forward to working directly with the management team to implement this revised business strategy."

Vernalis is not the only biotech company facing financial difficulties as Ardana this week placed itself in a position to be merged or sold within the pharmaceutical industry, stating that it was looking for extra funding for it's R&D programmes [PMLive February 20].

Piper Jaffray analyst, Sam Fazeli, told the Financial Times that Vernalis had become, it's takeover target for a company interested in fattening up its mid-late stage neurology pipeline.

As markets woes related to the credit crunch go unabated, the biotech industry is plagued by uncertainty over profitability and sustainability, which could see more pharmaceutical companies manoeuvring towards mergers and acquisitions.

21st February 2008

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